Global shipping company MSC secures approval to run trains on SA's rail network

South Africa’s logistics infrastructure revitalisation continues at pace as private sector investment comes in to help sort out the rail system, long a drag on South Africa's economy.

Economist Dr Roelof Botha told IOL that private sector involvement in areas such as transport and electricity was already paying off.

This comes as Business Day reported that MSC, the world's largest container shipping operator, is among 10 private companies that have been provisionally allocated slots to operate on South Africa’s rail network.

New private sector investment into the rail system is in line with one of four pillars that the World Bank recommended in February to boost economic growth.

The World Bank said that, by delivering high-quality and affordable infrastructure services, South Africa can reduce existing constraints on businesses and increase households’ disposable income.

“The report highlights that targeted policy actions – fostering competitive markets and strengthening institutions – can spur recovery and lay the foundation for sustainable growth and shared prosperity in South Africa,” said Axel van Trotsenburg, senior MD of the World Bank.

Transnet has repeatedly come under fire for letting down the private sector, with miners trying to export ore especially affected by port and rail inefficiencies. Transnet has ascribed some of its issues to theft.

However, Transport Minister Barbara Creecy is rapidly working to turn the state-owned enterprise around and has announced the approval of the selection of new train operating companies, a major milestone in South Africa’s rail reform programme.

The new train operating companies are expected to launch between late 2026 and 2028, aiming to boost freight rail volumes from 160 million to 250 million tons by 2030.

Transnet CEO Michelle Phillips has indicated that there is a determined response to alleviate a significant shortfall of an anticipated millions of tons in freight capacity.

As part of the ongoing resuscitation plan for Transnet, its Ports Authority unit said earlier this year that it had signed an agreement with Grindrod Eyamakhosi Joint Venture to develop and operate a container handling facility at the Port of Richards Bay’s Bayvue precinct.

The R285 million investment will increase the port’s container handling capacity four-fold.

Operation Vulindlela’s latest progress report stated that government had issued a request for Information for major private sector participation projects in the freight logistics sector.

“Operation Vulindlela is a joint initiative of the Presidency and National Treasury which aims to achieve more rapid and inclusive economic growth through a programme of far-reaching economic reform,” the report said.

In the transport department’s latest strategic plan, it says the National Development Plan (NDP) provides a strategic framework to guide actions on the maintenance and expansion of economic infrastructure such as transport with a focus on rail transport to support economic growth and social development goals.

The NDP states that, given government’s limited finances, private funding will need to be sourced for some of these investments.

In addition to issuing licences and setting tariffs, the NDP requires regulations to place emphasis on stimulating market competition and promoting affordable access to quality services.

IOL Business